British, American and Iberia Airlines to sign cooperation agreement

The UK’s British Airways, American Airlines and Spain’s Iberia this morning announced that they would soon be cooperating on flights between North America and Europe while they would also start to collaborate and expand on other routes together in the Oneworld Alliance.

Are the airlines merging? No. But aren’t they already all part of the Oneworld alliance? Yes, they are. What the airlines have agreed to is tighter collaboration among their operations. Ground operations, codeshares and mileage programs will be better integrated to ensure seamless operation among carriers (read: keep passengers hooked in the alliance), while costs and overlapping spending will be reduced.

It’s important to note that the airlines will continue to operate independently, similar to the Continental and United collaboration announced earlier this year. What’s not clear is whether they will be collaborating on pricing. As Virgin Atlantic, the main competition, sulks about the conglomerate having over 50% of the landing slots at Heathrow, many have noted the potential for monopolistic pricing among the new bedfellows.

So will prices actually go through the roof? Technically, less competition in the market suggests that prices may have the potential to rise — but there are still plenty of carriers and entry points into the EU. American, British and Iberia may soon have a good handhold on Heathrow (Sorry, Virgin), but Amsterdam, Gatwick and Frankfurt are still wide open, so with a little bit of creative routing you don’t have to call of your summer vacation.

Several Oneworld airlines are filing for antitrust immunity to get the ball rolling on the cooperation agreement — should this get approved, expect to see small changes in operations over the course of the year.

British Airways and Iberia to MERGE

Word coming in from Australia’s The Age is that British Airways plans to merge with Spanish national carrier Iberia in light of the tightened economy and fierce competition. The two are said to be in advanced talks in preparation for a merger, though several reports from the wire proffer conflicting reports about how complete the deals is.

Surprisingly, the European Union has already granted the two carriers permission to merge, in a process that is astonishingly faster than that in the United States (case in point, Northwest and Delta).

Operationally, the merger wouldn’t be outrageous; BA already owns a large part of Iberia, they are both in the Oneworld Alliance and both have a strong presence in Western Europe. And the unity of the two carriers would make BA a stronger player in the EU and transatlantic market…

At the very least, perhaps BA will enlighten Iberia a little bit on how to make their airline a little bit less of a crap bag. I have flown on IB several times in the past few years and am still dumbfounded at the poor quality of service on the carrier.

Details on the entire event are starting to come into focus as data stream into the interwebs — we’ll let you know how and if the merger works out.